Correct on both counts Mark. Check at the bottom of page 10 on the online rules; it clarifies both questions.
If the shot is successful (he draws a card with a
bullet hole), he may steal any Outlaw card (no
Sheriff card - not even Photo) from any other
player’s territory on the table7, add it to his hand,
and may play it on this turn, using the normal rules.
If a set is reduced below 3
cards by Most wanted!, it
still counts as a set played
and players may play less
than 3 cards for that